The UK government has dismissed MPs’ calls to fix holes in its coronavirus support schemes, sparking a fresh revolt from workers, campaigners, and Members of Parliament (MP).
Campaigners told Yahoo Finance UK it was “another huge smack in the face.” One struggling freelancer, who has spent months without income as he is ineligible for help, dubbed the lack of support “unbelievable” and said it had cost the Conservatives his vote.
Chancellor Rishi Sunak had come under heavy fire in a report by the cross-party Treasury committee of MPs last month, which warned at least a million people were “locked out” of his income protection schemes. The government is obliged to respond, but Sunak again ruled out changing the rules to help more people in his official reply to MPs, published on Thursday.
Mel Stride, Conservative chair of the Treasury committee, said it showed his party colleague had “drawn a line” under helping those ineligible for support.
He said MPs were unconvinced more people could not be helped, adding: “While the government is clear that it is moving onto the next phase of its recovery plan, it cannot just turn its back on those who are suffering.”
But Sunak wrote that the furlough and self-employed income schemes had been adapted “as far as is possible,” and that the government needed to “look forward and evolve our approach” as lockdown eases. He pointed to its £30bn ($38.2bn) plan to support, create and protect jobs, including cash for Jobcentres, traineeships, green homes, and discount meals.
A Treasury spokesperson added that the government’s crisis schemes had supported the incomes of 12.6 million people. He said the government had acted quickly to introduce “one of the most generous and comprehensive packages... in the world.”
Liberal Democrat MP Jamie Stone, who leads a new group of MPs campaigning for more support, said he was “disappointed” the chancellor had not met with them first. He told Yahoo Finance UK those excluded must be “at the forefront” in future policymaking.
Yahoo Finance UK spoke to campaigners representing workers in new jobs in March, company directors paid via dividend earnings and freelancers paid via PAYE—all of whom do not qualify for help.
‘Fraud risk’ for newly hired or self-employed
The chancellor’s letter, dated 15 July, defended not including newly hired or self-employed workers, arguing they cannot provide the paperwork needed to reduce fraud risks.
The furlough scheme is based on payroll information filed to HMRC by 19 March before the scheme was announced, when many March hires’ data was only submitted after this cut-off date. The self-employment income support scheme (SEISS) is based on tax returns up to 2019, which newly freelance workers lack.
Sunak said allowing evidence submitted after the schemes began would “significantly increase the risk of abuse,” as it could not be “confidently verified.” Organised crime gangs could “file fake or misleading returns” to claim self-employed grants, he added.
But Zoë Badder, who co-founded the New Starter Justice (NSJ) campaign after starting a job too late to be eligible for furlough, said the group was “dumbfounded” by his refusal to help. Many new hires have offered up contracts, emails and other evidence to no avail.
New hires are “losing their homes, unable to pay bills, struggling to put food on the table, and suffering badly with their mental health as a result,” she said on behalf of NSJ.
Company directors ‘urgently need rethink’
Dividend income is not eligible for furlough grants, leaving many company directors who pay themselves this way with minimal or no income.
Dividend income is when an executive pays themselves out of the profits of a company to the stockholders — instead of having a set annual salary. So if a company hasn’t made a profit, the person will not take home a pay cheque.
Sunak said he “carefully considered” a dedicated scheme, but said it would be “much more complex” than the other schemes. HMRC data does not differentiate dividends from director’s own companies and other sources, meaning directors would have to submit this themselves. HMRC could not “efficiently or consistently” verify this data, he said.
But Gina Broadhurst, co-founder of the Forgotten Ltd campaign group for such directors, said providing support was a question of “political will.”
“Good viable businesses, through no fault of their own, are going under every day,” she said. “We urge the chancellor not to turn his back on us.”
PAYE freelancers’ exclusion ‘unbelievable’
The government’s support divides workers into employees on payroll and freelancers who invoice clients, but many ‘PAYE freelancers’ fall between the two. Their payroll earnings prevent them claiming self-employed grants, but they cannot rely on clients to furlough them after only short temporary stints of work.
Sunak made a rare explicit acknowledgement of the group in his letter, and the fact they “do not have a scheme that expressly caters for them.” But he said they should seek other government support, from mortgage and credit holidays to council funds and the benefit system.
Ellie Phillips, a presenter and spokesperson for the Forgotten PAYE group, said it was “inhumane” to leave out these tax-paying freelancers after many had seen livelihoods “ripped away from them.” Many work in creative industries, which are among the hardest hit by lockdown and social distancing.
“The longer these gaps are left, the deeper the wounds are becoming with irreversible damage caused to the lives of millions, through no fault of their own,” she said.
She added that the government had budgeted for many more self-employed people to claim grants than the numbers so far, so should use the funds to widen eligibility.
Tim Pravda, a PAYE freelancer who works on logistics at live events, saw a year of work vanish when the virus and lockdown hit. He previously told Yahoo Finance UK he had been forced to swap his flat for his mum’s sofa, use all his savings, and stomach one rejected job application after another from major supermarkets.
“As a Conservative voter I have been totally let down by the government I helped put into No. 10,” he said. He will not vote Conservative in 2024. “How on earth can this government just totally ignore us? It’s unbelievable.”